Dentsu Sells Remaining Stake In Publicis Groupe Back To French Agency Company

Once Publicis' Largest Shareholder, Japanese Group Now Seeks International Growth Through Its Own Deals

Dentsu Inc. announced that it has sold its remaining 1.85% stake in Publicis Groupe back to Publicis, with the resulting cash injection causing the Japanese agency company to revise its earnings forecast for the fiscal year ending March 31, 2013.

Dentsu now expects net income to be up 28.5%. Last week it repeated an earlier projection that net income would drop by 5.0% compared with the previous year. Dentsu cited slowing growth in emerging markets like China and the prolonged European debt crisis as it announced results slightly lower than expectations for the nine-month period ended Dec. 31, 2012.

The share sale is the final step in unwinding a 10-year alliance between Dentsu and French firm Publicis that ended in February 2012, when the Paris-based holding company bought back a block of 18 million of its own shares from Dentsu for $848.5 million, and two Dentsu representatives resigned from Publicis' supervisory board. At one time, Dentsu was the largest outside shareholder in Publicis and hoped to work with Publicis to help Dentsu grow internationally. That never really worked out, and Dentsu has been growing outside Japan by making its own acquisitions.

In the transaction announced Friday, Publicis bought back a final 3.9 million shares held by Dentsu, at a price of 181.4 million euros ($242.9 million U.S. dollars).

"Dentsu and Publicis will continue to proactively consider all opportunities for future collaboration on their individual merits," Dentsu said. Management structures at two companies jointly established by the agency companies, Beacon Communications and Dentsu Razorfish, will remain unchanged.

Publicis Groupe issued its own announcement about the transaction. Publicis Groupe said: "The two groups will continue to consider all opportunities for collaboration and to maintain cooperative relations."

Dentsu did not say what it plans to do with the cash, though it has been bolstering its presence outside of its home market with a number of high-profile acquisitions including McGarryBowen, 360i and Firstborn, and its pending acquisition of Aegis Group.